A lousy 5% statewide or 10% in any rating territory wihtout OIR approval-WOW! Sounds like the same %\’s the OIR would approve for a rate filing two years ago. This will help fix the market-NOT! Co\’s will still not be able to gain adequate rate with legislation like this. I know, this is better tahn before. Wait unitl a co files 10% in a rating territory then the a co requests (makes a filing) for 3 or 4 % more and the OIR says the 10% is not actuarially sound. Ken and the boys will certainly abuse their power at that point to make a company change a form or reduce rates in another territory just b/c they can. Remember, all the Fl co\’s are rate adequate at the OIR\’s control. See how many co\’s are just writtng business hand over fist. CPIC will be the largest carrier in the state by hurricane season.
This would be a big improvement. The DOI is not responsible if an insurer that has been in the market for many years suddenly decides that its rates are inadequate. The insurer is. This change in flex rating would allow responsible insurers to get rate relief every year and provide some certainty to the process. South Carolina uses 7% and it has worked very well. Flex rating is something very intuitive to legislators and the great mistake of the insurance industry has been trying to get 10% bands or higher.
Dean – Do you work with florida filings? Co\’s are required every year to submit to the OIR that their rates are adequate. Co\’s go for a 10 to 12% rate increase and the OIR says they are not justified, but 7 or 8% is ok, thus why they are allowing the flex ban with those limitations. Many co\’s are responsible and have made filings year after year and have been rate supressed, by you guessed it, the oir b/c of political reasons. Have you followed the story of why Monroe county has no one to write business there? The OIR supressed the x-wind rates in that county b/c the wind only policiy rates are increasing very fast. SO, we can not allow the x-wind business to be priced correctly and there is no market for the business. Inflation is more than 5% a year and the cost to reconstruct homes is more than 10% a year. By the way, make a filing and see how fast you get it approved and implemnetd. Most filings take 100+ days to get approved. Rates are outdated by the time you get them approved and implemented.
I understand what you are saying. The proposed law would allow insurers to get 5% statewide and 10% in a territory without the Florida DOI being involved. The things you complain about are absolutely correct and that is why the flexibility is important in the proposed law. I don\’t disagree with you, I am just saying that flex rating with these parameters will over the long term provide rate relief. Long term being two or three years. It would provide a light at the end of a tunnel.
How about having the OIR simply regulate solvency and market conduct and let free market economics determine price? As part of the solvency issue, the OIR could make sure that companies do not charge irresponsibly low rates. As long as companies charge a rate that is at least adequate, the market would avoid wild swings between soft and hard that are mostly exacerbated by companies chasing down inadequate rates during soft markets and having to overcompensate during the hard markets or face insolvency during hard times because of inadequate surplus growth during the good times to cover the tough times. With companies unable to charge too little, supply and demand will adequately control the up side. Insurance is more expensive in Florida than most places for a reason. There is more regular exposure to catastrophic loss in Florida than most places. In fact, insurance is artificially too low, and so demand is greater than supply. As a result, Citizens continues to grow. Giving companies the ability to charge what they need to be profitable (i.e. the reason companies exist in the first place) will increase supply. There will thus be less need for Citizens. Citizens will shrink, and prices will eventually settle down to what is needed to be profitable, constrained only by competition. Novel? No. It’s the way most products in the U.S. are sold.
I agree with you that the DOI keeps rates to low which is counterproductive. Your idea is not something that would pass politically. Flex rating can pass and it would get you where you want to go eventually.
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A lousy 5% statewide or 10% in any rating territory wihtout OIR approval-WOW! Sounds like the same %\’s the OIR would approve for a rate filing two years ago. This will help fix the market-NOT! Co\’s will still not be able to gain adequate rate with legislation like this. I know, this is better tahn before. Wait unitl a co files 10% in a rating territory then the a co requests (makes a filing) for 3 or 4 % more and the OIR says the 10% is not actuarially sound. Ken and the boys will certainly abuse their power at that point to make a company change a form or reduce rates in another territory just b/c they can. Remember, all the Fl co\’s are rate adequate at the OIR\’s control. See how many co\’s are just writtng business hand over fist. CPIC will be the largest carrier in the state by hurricane season.
This would be a big improvement. The DOI is not responsible if an insurer that has been in the market for many years suddenly decides that its rates are inadequate. The insurer is. This change in flex rating would allow responsible insurers to get rate relief every year and provide some certainty to the process. South Carolina uses 7% and it has worked very well. Flex rating is something very intuitive to legislators and the great mistake of the insurance industry has been trying to get 10% bands or higher.
Dean – Do you work with florida filings? Co\’s are required every year to submit to the OIR that their rates are adequate. Co\’s go for a 10 to 12% rate increase and the OIR says they are not justified, but 7 or 8% is ok, thus why they are allowing the flex ban with those limitations. Many co\’s are responsible and have made filings year after year and have been rate supressed, by you guessed it, the oir b/c of political reasons. Have you followed the story of why Monroe county has no one to write business there? The OIR supressed the x-wind rates in that county b/c the wind only policiy rates are increasing very fast. SO, we can not allow the x-wind business to be priced correctly and there is no market for the business. Inflation is more than 5% a year and the cost to reconstruct homes is more than 10% a year. By the way, make a filing and see how fast you get it approved and implemnetd. Most filings take 100+ days to get approved. Rates are outdated by the time you get them approved and implemented.
I understand what you are saying. The proposed law would allow insurers to get 5% statewide and 10% in a territory without the Florida DOI being involved. The things you complain about are absolutely correct and that is why the flexibility is important in the proposed law. I don\’t disagree with you, I am just saying that flex rating with these parameters will over the long term provide rate relief. Long term being two or three years. It would provide a light at the end of a tunnel.
How about having the OIR simply regulate solvency and market conduct and let free market economics determine price? As part of the solvency issue, the OIR could make sure that companies do not charge irresponsibly low rates. As long as companies charge a rate that is at least adequate, the market would avoid wild swings between soft and hard that are mostly exacerbated by companies chasing down inadequate rates during soft markets and having to overcompensate during the hard markets or face insolvency during hard times because of inadequate surplus growth during the good times to cover the tough times. With companies unable to charge too little, supply and demand will adequately control the up side. Insurance is more expensive in Florida than most places for a reason. There is more regular exposure to catastrophic loss in Florida than most places. In fact, insurance is artificially too low, and so demand is greater than supply. As a result, Citizens continues to grow. Giving companies the ability to charge what they need to be profitable (i.e. the reason companies exist in the first place) will increase supply. There will thus be less need for Citizens. Citizens will shrink, and prices will eventually settle down to what is needed to be profitable, constrained only by competition. Novel? No. It’s the way most products in the U.S. are sold.
I agree with you that the DOI keeps rates to low which is counterproductive. Your idea is not something that would pass politically. Flex rating can pass and it would get you where you want to go eventually.